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Update on ILV settlements

EQC is working out the settlement amounts for around 4,400 customers who were told their properties qualify for Increased Liquefaction Vulnerability (ILV) land damage.

“We have made good progress so far but there is still more we need to do before we can start making any payments,” says EQC Head of Canterbury Land Settlement, Keith Land.

“This work includes determining pre-quake property valuations and the amount of the reduction in market value for affected properties as the direct result of ILV land damage. We are also investigating whether some properties with ILV land damage can be feasibly repaired. In these cases, a settlement based on repair cost may be available.”

EQC expects to start settling ILV customers in mid-year. “We recognise that our customers have been waiting a long time for ILV settlements, but this is the first time this type of land damage has been recognised as insured damage, so the settlements involve ground-breaking work which takes time. “We want to make sure we have robust valuation assessments in place and give our customers quality information,” says Mr Land. Settlements for ILV land damage will be made by cash payment, which is how EQC has been settling all land claims to date.

The cash settlement for ILV land damage will be based on one of two approaches: repair cost, or reduction in market value of the property due to ILV land damage – also called Diminution of Value (DOV). “We are establishing which properties can have their ILV land damage feasibly repaired, and which can’t, thereby require settlement on the basis of DOV. It’s important to note that each property is considered on its own merits. Each property has unique characteristics, which means that one-size-fits-all or an automated settlement approach is inappropriate,” says Mr Land.

ILV land damage settlements on the basis of repair cost

Where, for example, the house needs to be rebuilt, EQC will likely settle the ILV land damage on the basis of repair cost if:

there is a feasible repair method for the repair of theILV land damage on the property;

the customer intends to carry out the repair within a reasonable period of time using that method;

the land has not been sold since the earthquakes.

ILV land damage settlements on the basis of DOV

Based on what is known to date, EQC expects that most ILV properties will be settled on the basis of DOV. This is because there will generally not be a feasible repair to ILV damage where the house has remained in place after the earthquakes. Furthermore, if an ILV property was repaired or rebuilt without any repair of the ILV land damage, it is likely the settlement will be based on DOV. The settlement will also be based on DOV if the property has been sold since the earthquakes.

“Generally the DOV approach and settlements for what is another non-visible land damage type will be similar to how EQC is handling Increased Flooding Vulnerability (IFV) claims.

“For those properties where we are investigating settlement based on repair cost, we will contact customers in two months’ time to inform them of the potential to repair the ILV damage on the property, and see whether they intend to repair the land,” says Mr Land. EQC expects to complete ILV settlements, together with other outstanding land settlements, by the end of this year.

FOR MORE INFORMATION on ILV land damage visit the EQC website at our ILV webpage.